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Tenant Wants Lease-Option |
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I have a good tennant renting my mother's condo that wants an option to buy. Mother is elderly, in poor health, in a nursding home, with a
me as the owner, and her with a life option. For tax purposes we will not sell as long as she is alive.
The tennant wants an option to buy when the time comes, at a predetermined price, with some kind of escalator clauses to account for appreciation. The tennant wants to make some significant improvements (about 50K) and is willing to lose those if they don't excersise the option. Any suggestions as to the details of an agreement that will take care of thoses issues? Thank you, Bonb |
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First off -- I don't know what you mean by "life option." if your mother is "life tenant" than she is the owner as long as she is alive. If she sold outright,she could use the homesellers tax exclusion on her share of the proceeds--you would owe tax on your share, the portion due to your claim as eventual owner. Have you discussed the whole matter with
a tax attorney or a CPA? There's also the matter of recaptured depreciation -- it's complicated, and I think you should get some specific information before you decide what to do.
For a lease-option -- even though you know this tenant, insist on a credit report before you're committed to anything. Your lawyer or CPA can help you analyze it. And any good real estate lawyer can help you put together an agreement that protects your interests.
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Edith
Originally published on July 31, 2008 |
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